30 November 2007

In our October 1 blog “Is Patent Exhaustion The Big New Thing?” we referred to the “exhaustion” argument as a pretty powerful tool for Nokia against Qualcomm in their negotiations on a continuation of the CDMA/WCDMA license.

Nokia has not come very far in Europe with this argument. This week in the UK the trial between the two started before Mr. Justice Floyd, likely to last 3 weeks. On October 23 , the Landgericht Mannheim in Germany dismissed Nokia’s claim that Qualcomm’s patent rights were “exhausted”. Nokia’s further request to the court to refer the issue of exhaustion of rights to the European Court of Justice, was also denied.

Nokia faced the same fate in The Netherlands, where the District Court denied Nokia’s claim that Qualcomm’s patents were “exhausted” because the chipsets that are used in the Nokia mobile handsets are being obtained from a third party (Texas Instruments) that has a license from Qualcomm under the alleged infringed patents. (for the English translation of the The Hague judgement, see here).

The argument ran parallel to a case in the US between LG Electronics and Quanta Computer Inc. currently before the US Supreme Court. In the Dutch case, the court found against Nokia, e.g. by deciding that Nokia had failed to specify both the products and the patents that were exhausted and which specifics of the products that would be covered under the TI license.

Our take from this is that last word has not been said on this complicated issue, but that clearly Qualcomm has the upper hand now in the negotiations. One wonders whether the Nokia strategy was smart enough to not (try to) agree before the German and Netherlands court would rule (see our October 1 blog).

The case in the UK, from what we could derive from pubic sources, is slightly different than in Netherlands and Germany in that Qualcomm is suing Nokia in the UK under 2 patents (EP 0,629,324 and EP 0,695,482) both related to power control. Qualcomm’s claim under '324 is limited to contributory infringement as the product claims require both a handset and a base station. They also seek a declaration of essentiality in respect of '324 re the 3G standard.

The infringement claims relate to specific handsets purchased by Qualcomm, but these are cited merely as 'examples' i.e. they claim the same arguments apply to all Nokia handsets. However, CDMA handsets are excluded as Nokia is licensed for these.

Nokia has counterclaimed for revocation. It also has other arguments to the effect that Qualcomm must grant FRAND licenses, and as to what the terms of those should be. Other Nokia arguments include waiver, estoppel, competition law and non-availability of injunctive relief. However, all these issues have been put off to a 2nd trial in the event that Qualcomm succeeds in the current UK trial.

click herefor US ITC decision of December 13, 2007 in favor of Nokia agaisnt Qualcomm.

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In the December 2007 JIPL&P:

Pat Treacy and Sophie Lawrance, "FRANDly fire: are industry standards doing more harm than good?" One of the major benefits of standard-setting is that, once a key piece of innovation is developed, its proprietary does not exclude its use by others but allows its use by any third party willing toaccept a licence on FRAND (‘fair, reasonable, and non-discriminatory’) terms. The authors discuss how enforcement of patents that read on a (in this case: telecom) standard relate to FRAND principle

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